Financial guide to the dirty 30’s
Welcome to week 2 of the month of ages. This week I am going to delve into the 30 to 40 age bracket which is a whole new kettle of fish. At this time in your life many of you are expanding the family and/or upgrading the family home. You may also start thinking about what kind of education you want to provide for your children and setting yourself up for the future.
Hopefully you have addressed all of the important stuff from your 20’s. If you haven’t, well don’t worry, just pop on over to this post and get to work. What’s the saying… your never too old to start.
1. Education savings – If you want to provide your children with private schooling, then you may want to start preparing for the costs for this. There are specific education savings accounts, however depending on your needs as a family; this may not necessarily be the best option for you.
It is important to get professional advice on these accounts so that you aren’t taken for a ride. There are usually some tax breaks involved; however the other costs and restrictions placed on these accounts may not be worth your while.
The estimated costs of private education varies, but you can be looking at up to $20,000 per year, per child for private schooling and that doesn’t even include the cost of uniforms, books, ballet lessons and so on.
2. Income protection – It is likely that during the younger child rearing years, there is only going to be one bread winner in the family. So, there is a lot of pressure on the one who is working to bring home the bacon. Income protection will help to cover them if they can not work due to illness or injury. This way, if something does happen to the main bread winner, then there is still a regular income to support the family.
Remember, workers compensation only covers people if they are injured during work. Anything outside of this is not covered. Income protection covers you 24 hours a day.
3. Health insurance – This can be packaged for the whole family, and is the best way to have piece of mind. It is especially important for those who are earning over $88,001. If you are above this salary, you will be paying the medicare levy surcharge anyway, so you may as well put your money towards health insurance instead of tax.
4. Pay more than the minimum – If you have a home loan, make sure you have an offset account and pay more than the minimum repayments. An offset account means that the money is sitting there in cash, and available to use should you need it, but it reduces the interest you pay. Why would you want to pay off your home over 30 years, when you could pay it off over 15 years? Debt is usually necessary to buy a home but the quicker you pay it off the better. Simple.
5. Will the government pay you? – Depending on your family’s financial situation, you may be eligible for some tax benefits or payments from the government. The government contributes to child care costs to help parents get back to work. There are also other one off and ongoing payments that may be available to you. If these benefits are available to you, then you should ensure that you are getting them.
6. Can you start investing now? – My answer to this question is usually a whole hearted Yes, but this is dependant on your situation. The effects of compounding are a very significant thing, so the earlier you invest the better. Given your age you can probably look towards more aggressive growth style investments as you have time to weather any investment storms. The earlier you get into the habit of putting money away to invest, the richer you will be in retirement.
The 30’s can seem worlds away from the 20’s. A night out partying on the town could be replaced with a 3 year old’s fantasy dress party, together with fairy bread and pass the parcel. As these changes start to happen, your priorities will shift and so the financial decisions that you make will be different.
As always, any questions please let me know. Everyone’s situation is different! Next week is of course the 40′s!
– This post is from our resident senior financial planner, Cara Brett. Check out her details in our about us page.